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Gavin123

Valuation For Mortgage Purposes

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If your appling for a mortgage on a property and its indepentantly valued by a mortgage company, is this valuation a true representation of what the property would sell for or is it a conservative estimate? If it's conservative what sort of rough percentage should be applied to the valuation to represent what its likely sale price on the market would be?

cheers

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If your appling for a mortgage on a property and its indepentantly valued by a mortgage company, is this valuation a true representation of what the property would sell for or is it a conservative estimate? If it's conservative what sort of rough percentage should be applied to the valuation to represent what its likely sale price on the market would be?

cheers

Are you serious? There's no certainty in this game friend just now, its a big bad world of winners and losers, greed and fear and you need to start doing your own research rather than asking impossible questions here. Blunty stated only to make you think!

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You can probably expect them these days to make it a conservative valuation. However you might also reasonably expect that this conservative valuation is much closer to what buyers are willing to pay than your typical estate agent valuation.

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You can probably expect them these days to make it a conservative valuation. However you might also reasonably expect that this conservative valuation is much closer to what buyers are willing to pay than your typical estate agent valuation.

The reality is that surveyors have no more idea of what a house wil sell for than you or I do because very little is selling that's not a distressed sale. A floor on prices has yet to be established. It's lottery time for vendors as to whether or not they can find a mug at current asking prices, -20% RV should attract interest from a savvy buyer.

So what's a conservative valuation Catmandu? A bit less than what it's really worth? So what's is really worth then? Circular arguments!

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Are you serious? There's no certainty in this game friend just now, its a big bad world of winners and losers, greed and fear and you need to start doing your own research rather than asking impossible questions here. Blunty stated only to make you think!

I appreciate its difficult to put a price on a property at the minute and many factors need to be considered, rv, area etc. All i'm trying to establish is what weight should be assigned to this factor.

Suely it's a fair assumption that a valuation that a bank has commissioned to establish the value of a property which that they intend to lend money for would be the nearest guide to its true worth (and if anything probably on the low side). At best would it not be a better guide than the RV, which takes no account of the internal condition of a property?

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Strictly speaking the valuations are covered by the 'Red Book'.

From memory the valuation is based on an open market sale between a willing seller and a willing buyer. It says something else about available credit. However, in todays market they have to forget about a willing seller and a willing buyer and assess if there information out there to support this same value. Three years ago there was major problems with this, with volumes, even lower than today and rapidity falling prices. We had to revisit a few sales as the valuers had valued them at a lower price. particularly after, some lenders instructed valuers to ignore other new-build sales. Therefore the valuer could only consider the re-sale of nearby council estate housing. This restriction was later removed.

We havnt had a valuation issue in over two and a half years, nor have I heard of it as an issue for anybody else.

In the boom days the valuers were valuing properties at over the sale price to allow the 90% loan to turn into a 100% loan. (they did the same for loans to buy development sites). After the crash they priced in further falls until about two and half years ago when the falls started to level out.

Are they conservative, yes. No valuer will stick his neck on the line. Their PI companies have warned them well.

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Strictly speaking the valuations are covered by the 'Red Book'.

From memory the valuation is based on an open market sale between a willing seller and a willing buyer. It says something else about available credit. However, in todays market they have to forget about a willing seller and a willing buyer and assess if there information out there to support this same value. Three years ago there was major problems with this, with volumes, even lower than today and rapidity falling prices. We had to revisit a few sales as the valuers had valued them at a lower price. particularly after, some lenders instructed valuers to ignore other new-build sales. Therefore the valuer could only consider the re-sale of nearby council estate housing. This restriction was later removed.

We havnt had a valuation issue in over two and a half years, nor have I heard of it as an issue for anybody else.

In the boom days the valuers were valuing properties at over the sale price to allow the 90% loan to turn into a 100% loan. (they did the same for loans to buy development sites). After the crash they priced in further falls until about two and half years ago when the falls started to level out.

Are they conservative, yes. No valuer will stick his neck on the line. Their PI companies have warned them well.

Did the falls start to level out? I must have missed that.

Edited by 2buyornot2buy

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Did the falls start to level out? I must have missed that.

According to UUJ they are levelling out at -15% per annum.

BVI likes Nationwide at -2%. (I think they have less than 7% of the market in NI)

A well rehearsed argument here and probably not worth reopening.

If you are unsure, just trust your own eyes.

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I appreciate its difficult to put a price on a property at the minute and many factors need to be considered, rv, area etc. All i'm trying to establish is what weight should be assigned to this factor.

Suely it's a fair assumption that a valuation that a bank has commissioned to establish the value of a property which that they intend to lend money for would be the nearest guide to its true worth (and if anything probably on the low side). At best would it not be a better guide than the RV, which takes no account of the internal condition of a property?

From VLA/LPS - Posted elsewhere but worth repeating.

To keep values fair, we assume all properties have the same standard of kitchen and bathroom for their age, type of property and location. Assessed capital values are based on property market sales.

In order to assess all 700,000 capital values across Northern Ireland, the VLA (now LPS) in a three year period up to and just beyond January 2005 inspected and checked information on over 40,000 house sales across Northern Ireland. The initial sales information was provided to VLA by HMRC via the Stamp Duty Land Tax process. All actual sales were inspected and many householders were interviewed to ensure we had correct sale and property data for these sales.

The valuation models developed using these sales included an adjustment to account for house price inflation over the 3 year period leading up to 1 January 2005, which is the date for all domestic valuations. The modelling process selected sales comparisons for every property on proximity and similarity. All modelled capital values produced for the Domestic Revaluation in Northern Ireland were reviewed by professionally qualified valuers, all of whom are members of the Royal Institution of Chartered Surveyors, in order to produce final values for inclusion in the published Valuation List.

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If your appling for a mortgage on a property and its indepentantly valued by a mortgage company, is this valuation a true representation of what the property would sell for or is it a conservative estimate? If it's conservative what sort of rough percentage should be applied to the valuation to represent what its likely sale price on the market would be?

cheers

The valuation (particularly if you have a good low LTV) will be the price you agree on the open market. Might be different for new builds especially if you have a high LTV 90%, the valuation may be lower that the agreed price to reflect the fact that if you sold the house it would no longer be new and would obviously have had the builder profit built into the price.

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According to UUJ they are levelling out at -15% per annum.

BVI likes Nationwide at -2%. (I think they have less than 7% of the market in NI)

A well rehearsed argument here and probably not worth reopening.

If you are unsure, just trust your own eyes.

I have no preference in supplier of data and depending on what each reports they are roundly criticized or praised.

If we are talking about the approach of those carrying out valuations this is important.

[Looking at the overall fall of around 45% over the last 4 years, this can be divided into 35% over the first 2 and 10 over the second 2 years as follows.]

During the first two years of the crash the NI House prices, going by the UUJ fell 35%, from £250 to £164k (Q3 2007 to Q3 2009). I can understand the valuers fear of over pricing a property as the value may have fallen more between the time they carried it out and the time the funds were released. The opposite was true on the way up and this allowed, most of them to add a little froth, 'knowing' the market would move on and their price would proved to be correct (totally outside the Red Book).

In the following two years, going again by the UUJ, the prices dropped a further 10%, from £164k to £137k (Q3 2009 to Q2 2011)

As all these reports, including the UUJ indicate that the recent drops are predominately in the resale sector. The New Build sector would not have dropped as much, whilst in the first two years the drops were mainly in the new build sector.

Therefore, particularly in the new build sector the fall in house prices certainly began to level around Q2 2009. I cannot foretell the future but I can look back with certain amount of knowledge. As a result the valuers were more confident and the, somewhat, understandable concerns the valuers had with the valuation process, particularly in the new build sector has largely disappeared over the last two years.

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The valuation (particularly if you have a good low LTV) will be the price you agree on the open market. Might be different for new builds especially if you have a high LTV 90%, the valuation may be lower that the agreed price to reflect the fact that if you sold the house it would no longer be new and would obviously have had the builder profit built into the price.

I don't agree with this. Even if you have a low LTV the valuation is important to the bank as it sets the actual LTV and may be the deciding factor in what interest rate you are charged. The valuer will not be aware of how much you are borrowing and will have to assess what he believes that house can be sold for at that time.

Builders profit, or lack of it will not come into the sale price or the open market value. In new build this is easier to establish as there are normally similar properties or house types for sale. You wont increase your offer to allow the builder a margin, why should you. If the Val is lower than the agreed price, firstly the bank will possibly reject and secondly the purchaser will likely do the same. Even if the valuer is wrong most purchasers would, understandably renegotiate the price down to the valuation level.

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I have no preference in supplier of data and depending on what each reports they are roundly criticized or praised.

If we are talking about the approach of those carrying out valuations this is important.

[Looking at the overall fall of around 45% over the last 4 years, this can be divided into 35% over the first 2 and 10 over the second 2 years as follows.]

In the following two years, going again by the UUJ, the prices dropped a further 10%, from £164k to £137k (Q3 2009 to Q2 2011)

We've been over this BVI but evidently you want to continue with this spin that prices have only fallen 10% over the last 2 years. It's nonsense of course but maybe if I explain again in simple terms you might finally get it.

If, as a FTBer I had bought a house in Q3 2009 for £164K and then managed to sell it for £137k in Q2 2011, then I would have lost £27K or 16.4%, probably all my initial deposit and probably still owing monies on the mortgage. I didn't buy the house in Q2 2007 so I don't give a fiddle what it might or might not have sold for.

Oh and BTW, the annual rate of fall (not bi-annual) by the same source you quote is -16%.

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We've been over this BVI but evidently you want to continue with this spin that prices have only fallen 10% over the last 2 years. It's nonsense of course but maybe if I explain again in simple terms you might finally get it.

If, as a FTBer I had bought a house in Q3 2009 for £164K and then managed to sell it for £137k in Q2 2011, then I would have lost £27K or 16.4%, probably all my initial deposit and probably still owing monies on the mortgage. I didn't buy the house in Q2 2007 so I don't give a fiddle what it might or might not have sold for.

Oh and BTW, the annual rate of fall (not bi-annual) by the same source you quote is -16%.

I give you the figures from the UUJ. A similar picture can be read from the Nationwide figures.

In these reports the 45%, or total fall can be split roughly 35% in the first two years and 10% in the second two. It is not nonsense. Yes the average price is still falling and may well continue but the vast majority of the falls (77% of the falls happened in the first two years). The remainder since.

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I give you the figures from the UUJ. A similar picture can be read from the Nationwide figures.

In these reports the 45%, or total fall can be split roughly 35% in the first two years and 10% in the second two. It is not nonsense. Yes the average price is still falling and may well continue but the vast majority of the falls (77% of the falls happened in the first two years). The remainder since.

Clinging on to the madness of the peak as a means of minimising or trivialising what's happening in today's market seems to be evidence of the real desperation being reported in the local construction industry.

House prices are falling at -16% per annum in NI, that's crash levels - only someone who is dillusional in my view could construe otherwise.

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Clinging on to the madness of the peak as a means of minimising or trivialising what's happening in today's market seems to be evidence of the real desperation being reported in the local construction industry.

House prices are falling at -16% per annum in NI, that's crash levels - only someone who is dillusional in my view could construe otherwise.

Very well put as alway.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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